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Table of Contents
Off-Balance Sheet Arrangements
At December 31, 2008, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K.
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141R will significantly change the accounting
for business combinations in a number of areas, including the measurement of assets and liabilities acquired and the treatment of contingent consideration,
contingencies, acquisition costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in deferred tax asset
valuation allowances and acquired income tax uncertainties in a business combination after the measurement period will affect the income tax provision. SFAS
No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after
December 15, 2008, which means that it will be effective for our fiscal year beginning January 1, 2009. Early adoption is prohibited. SFAS 141R will impact the
accounting for any acquisitions completed subsequent to December 31, 2008.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements,” which establishes accounting and
reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is effective for business
arrangements entered into in fiscal years beginning on or after December 15, 2008, which means that it will be effective for our fiscal year beginning January 1,
2009. Early adoption is prohibited. While we are currently evaluating the impact of adopting SFAS No. 160 on our Consolidated Financial Statements, we do not
expect the adoption of SFAS No. 160 to have a significant impact on our financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities.” SFAS No. 161 is intended to
enhance the current disclosure framework in FASB Statement 133, “Accounting for Derivative Instrument and Hedging Activities.” SFAS No. 161 requires
enhanced disclosures about an entity’s derivative and hedging activities. SFAB No. 161 is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged. While we are currently evaluating the impact of adopting SFAS No. 161 on our
Consolidated Financial Statements, we do not expect the adoption of SFAS No. 161 to have a significant impact on our financial statements.
In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.”
This FSP clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value
of a financial asset when the market for that financial asset is not active. In particular, it provides additional guidance on (a) how the reporting entity’s own
assumptions (that is, expected cash flows and appropriately risk-adjusted discount rates) should be considered when measuring fair value when relevant
observable inputs do not exist, (b) how available observable inputs in a market that is not active should be considered when measuring fair value, and (c) how the
use of market quotes (for example, broker quotes or pricing services for the same or similar financial assets) should be considered when assessing the relevance
of observable and unobservable inputs available to measure fair value. This FSP is effective upon issuance, including prior periods for which financial statements
have not been issued. The Company evaluated the impact of this FSP and concluded that its considerations in determining the fair value of its financial assets
when the market for them is not active are consistent with the FSP’s guidance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate and Market Risk
There has been significant deterioration and instability in the financial markets during 2008 and into 2009. This period of extraordinary disruption and
readjustment in the financial markets exposes us to additional
43
Source: SUPPORTSOFT INC, 10-K, March 11, 2009